Rajoy set to win vote to be Spain's leader, ending gridlock
| Reuters

MADRID Spain's 10 months without a government should end on Saturday when parliament is set to grudgingly grant conservative Mariano Rajoy a second term as prime minister.But political instability may persist as Rajoy's weak minority government struggles to build support to pass legislation in a hostile parliament.After two inconclusive elections and months of fruitless attempts at coalition-building, a controversial decision by the opposition Socialists to abstain should allow Rajoy to be confirmed as prime minister in a parliamentary confidence vote set for 7.45 p.m. (1745 GMT) on Saturday.The result will be a triumph for the 61-year-old Rajoy, who is renowned as a political survivor.After winning the 2011 election, Rajoy was forced to implement austerity policies as Spain endured a severe recession, unemployment soared to 27 percent and the country's banks needed a 41 billion euro ($45 billion) European bailout.Unlike in his first term, when his absolute majority meant he could afford to ignore the opposition, his conservative Popular Party now has only 137 seats in the 350-seat parliament and will depend on support from others.Rajoy sounded conciliatory in a speech to parliament this week, offering to work with opponents on issues like pension and education reform.

"The exceptional circumstances demand that we put aside ideological confrontations and combine our efforts ... because we are dealing with an unheard-of situation," he said.But his political foes are sceptical he can change his style. Thousands of demonstrators are expected to march in protest against a new Rajoy government in Madrid on Saturday.The Socialists, the second largest force in parliament, have made clear that while they will allow Rajoy to form a government to end the political stalemate, they will fight Rajoy's policies and will not approve his budgets.That could mean the new government will be short-lived.

Antonio Barroso, a senior analyst at risk consultancy Teneo Intelligence, said Rajoy will head a minority government with the weakest parliamentary support since democracy was restored in Spain after General Francisco Franco's death in 1975."It is unlikely that the new government will last four years," he said in a note.Rajoy will be able to count on support on some issues from the liberal Ciudadanos or "Citizens" party, which came fourth in June elections.

Rajoy will attempt to out-manoeuvre a divided left-wing. The Socialists, in power for half of the last four decades, are bitterly divided over their leaders' decision to allow Rajoy to govern after blocking him earlier.The Socialists face a strong challenge for leadership of the left from the new anti-austerity Podemos party.The economy is improving but Rajoy must find a way to shrink Spain's budget deficit to meet a 2017 target agreed with Brussels, a task which may require 5 billion euros of spending cuts or extra revenues.Rajoy, a strong defender of Spanish unity, will also have to respond to an independence push by the wealthy northeastern Catalonia region, which aims to hold a referendum next year on breaking away from Spain.($1 = 0.9142 euros) (Editing by Tom Heneghan)

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